The TRADE predictions series 2023: Technology, part one

Andrew Morgan, president and chief revenue officer, TS Imagine: Last year’s volatility and volumes only underscored the fact that technology is the difference maker when it comes to navigating modern markets. Disparate systems built on legacy technology are not fit for purpose and business desktops require consolidated, multi-asset systems to be able to achieve better results and operational efficiencies.

As the market continues to evolve, so must the underlying technology. Liquidity, risk management tools and business analytics will be front of mind in the new year for managers. Businesses will have to navigate constantly evolving markets, high inflation and rising interest rates. We expect a major shift to hedging strategies to mitigate the turbulence in the markets, and desks that do not have the right underlying EMS technology, especially the capability for electronic fixed income trading, will face a major disadvantage. Fixed income trading has long been associated with legacy processes, but with a hangover from tight liquidity in bonds expected into next year, we expect the industry to push the electronic envelope next year.

Dom Holland, UK head of sales, LedgerEdge: Innovation and efficiency will continue to grow rapidly, but 2023 will see a move to higher quality information with intelligent filtering to remove “noise”. The decades-long journey from analogue to digital finance has resulted in money evaporating from our lives – making transactions faster, easier and cheaper. The same process transforms fixed income. The past 20 years have seen markets embrace electronic dissemination of information. We’re past the tipping point of having too much information, and since it’s blindly delivered, the quality of it doesn’t have to be high. At first it was about quantity to promote dialogue, but now there are tools that allow market participants to better control and target the information they send. As more users and markets embrace new capabilities, participants will better filter what they consume and advertise to individual users.

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The role played by market makers will also change, and we will continue to see evolution in how trading desks operate. The adoption of DLT/AI and other new technologies will accelerate the move to quality over quantity. From a business perspective, the market has all the protocols it needs. There will be a move to request flow (RFS) for the more liquid part of fixed income markets, continuation of RFQ for medium liquid areas and bilateral negotiation for less liquid; because participants will have high confidence that they are in a real negotiation based on an improved pre-trade understanding. New technology will continue to stimulate transparency, drive efficiency and create volumes in parts of the market it has opened up.

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Andy Mahoney, managing director, EMEA, FlexTrade Systems: The next year will see further steps to build the next generation of the trader, with the ultimate goal of improving, extending and complementing the skills of the trader. The speed at which technology can be developed and delivered has accelerated, and what would have been considered impossible just a few years ago is now commonplace. Innovations like OpenAI translate natural language into code that can interact with APIs seamlessly, blurring the lines between humans and machines. Combined with FDC3 2.0 intentions driving the next generation of interoperability and a single, seamless workflow-led design between OMS, EMS and interconnected applications, it’s an area we expect to see rapidly develop in 2023, providing the next wave of innovative, business-centric solutions . .

Mark Govoni, chief executive officer of agency execution department, Liquidnet: Rising operating costs, increased market volatility and increased regulatory burden have led to a wave of mergers and acquisitions in the asset management industry, prompting buyout firms to review their business functions and find a way to do more with less. In this environment, trading of multi-valued assets has gained momentum and as such, trading desks are evolving to accommodate this change. One challenge that remains is the need for cross-asset platforms to be able to excel across all asset classes, with high-quality and consistent coverage, which can be difficult as technology, pricing and access to liquidity vary across asset classes. Technology will be key to ensuring the shift to multi-value trading is seamless across the buy and sell side. However, the experienced human trader will continue to play a vital role in helping to execute complex trades and larger blocks, against a backdrop of increased volatility and a hybrid working model. In these conditions, the buy-side and sell-side will have to work closely together to create a more efficient business ecosystem, bring innovation to the market and allow multi-value business to flourish.

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